SunSirs: Nickel Prices Fluctuated in August

Price trend

Due to the game between macroeconomic expectations and weak fundamentals, domestic nickel prices experienced overall volatility in August, with prices initially rising, then falling, and repeatedly surging and retreating. According to the SunSirs commodity market analysis system, spot electrolytic nickel was quoted at 122,516 RMB/ton on August 29th, a slight monthly increase of 1.13%, but still down 6.97% year-on-year. A mix of bullish and bearish factors in the market: macroeconomic policy expectations and loose liquidity provided support, while high inventories and weak actual demand limited price upside.

Analysis review

Early in the month (August 1-8): Nickel prices initially rose but then stagnated, with the spot price at 122,316 RMB/ton, a weekly increase of 0.96%. Market sentiment was influenced by macroeconomic policy expectations, but fundamentals lacked a clear driving force.

Mid-month (August 9-15): Nickel prices rose but then retreated, closing at 121,850 RMB/ton, a weekly increase of 0.58%. Early in the week, prices rose on expectations of a Federal Reserve rate cut and the temporary suspension of US-China tariffs, but high inventories and weak stainless steel demand led to a decline.

Late in the month (August 16-29): Nickel prices fluctuated and weakened before rebounding, ultimately closing at 122,516 RMB/ton. Powell's dovish remarks, favorable domestic policies, and a weaker US dollar all contributed to the rebound, but demand remained weak.

Macroeconomic factors: mixed bullish and bearish outlook, dominated by expectations

Overseas Macroeconomic Environment:

Weak US economic data, with non-farm payrolls significantly below expectations and the unemployment rate rising, reinforced expectations of a Federal Reserve rate cut (the market expects 25 basis point cuts in September and December).

The US dollar index experienced increased volatility, initially rising and then falling, impacting nickel prices, which then experienced pressure and rebound.

The US's imposition of tariffs on multiple countries, the escalation of global trade frictions, and the US-Russia meeting, along with geopolitical easing, alternately impacted market sentiment.

Domestic policy supported:

Policies such as the trade-in program for consumer goods and equipment upgrades continued to advance, and the Ministry of Finance allocated 69 billion RMB in special treasury bonds.

The State Council meeting emphasized expanding domestic demand, and the Ministry of Commerce proposed measures to promote service exports, boosting market confidence.

Industrial data remained stable, with value added of industrial enterprises above designated size increasing by 5.7% year-on-year in July. However, this had a limited direct impact on nickel prices.

Supply and demand fundamentals: high inventory and weak demand suppressed prices

Supply Side:

Global nickel inventories remained high, with LME inventories increasing to 209,676 tons and Shanghai nickel inventories rising to 21,905 tons, maintaining the surplus situation.

Indonesian nickel ore prices rose slightly, while low-grade ore prices in the Philippines fell due to increased shipments.

Demand side:

Stainless steel production: August production increased by 2.29% month-over-month, but still decreased by 1.64% year-over-year. Inventory reduction was slow, leading to cautious end-user purchasing. The benchmark stainless steel price on SunSirs was 13,075.00 RMB/ton on August 29, down 0.04% from the beginning of August, reflecting a strong wait-and-see attitude in the market.

New energy sector: Ternary precursor production increased by 5.71% month-over-month, but the growth rate is expected to slow to 5.4% in August, indicating a weakening of demand growth. Spot market purchases increased at low prices, driven by immediate demand, but overall trading volume was dominated by a wait-and-see approach, lacking sustainability.

Future outlook:

In the short term, nickel prices will continue to be influenced by both macroeconomic expectations and weak fundamentals.

Supporting factors: Growing expectations of a Fed rate cut, a weakening US dollar, continued domestic policy support, and the approaching traditional peak season of September and October are likely to provide support and a temporary rebound.

Repressive factors: High global inventories, weak stainless steel demand, slowing growth in new energy, and uncertainties from trade frictions will limit price upside.

Overall: Nickel prices are expected to remain volatile, with a breakout awaiting clearer policy signals or improved fundamentals, such as inventory reduction and a significant rebound in demand.

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